Exhibit 17-3

-Refer to Exhibit 17-3 Assume that the starting point on the production function is point A. After an increase in the technology coefficient,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________..

Question

Exhibit 17-3

-Refer to Exhibit 17-3 Assume that the starting point on the production function is point A. After an increase in the technology coefficient,there would be a ______________________ which would shift the LRAS curve from LRAS₁ to _______________ resulting in _______________..

Quizplus · Accepted Answer

An increase in technology coefficient would shift the LRAS curve upward, not along the production function. Therefore, options A and C are eliminated. As point A is the starting point on the production function, a shift upward of the production function would result in the intersection of the new LRAS curve (LRAS₂) with the production function at point B. This indicates an increase in potential output, resulting in economic growth. Therefore, the correct answer is B.

Exhibit 17-3 -Refer to Exhibit 17-3 Assume That the Starting Point on 17-3